Robert Powell, who is a columnist for Retirement Weekly,
talked to Maryland News Now Co-Host John Patti Wednesday about the differences between the cash balance plan and the 401 (k) plan.

ôThe main difference
is that [in a case balance plan] the employer is contributing to your account," he said. "Whereas in a defined contributional 401 (k) plan, the employee is contributing to the account. A cash
balance plan is much more like a defined benefit plan where the employer deposits
money on behalf of the employee into the account.ô

In Powell's perspective, since not all employers are contributing a match, the cash balance plan may be more beneficial to employees.

ôThe employee, especially in the small to mid-size
companies, can get a tax-break that could lower their taxable income as a
corporation,ö he said. ôAnd the employee benefits largely because what they get
is a stated account balance that doesn't vary with the vagaries of the market. In the 401 (k) world, how much you get at the end of retirement, and how much you will be able to take out is very variable."

Powell said with the cash balance plan, people will know exactly how much they have in their accounts when they retire, and they will
be able to withdraw it either as a gross dollar amount or as monthly income.